From Briefing.com: If Meatloaf thinks two out of three ain't bad, we wonder what he would think of four out five. Dating back to last Wednesday, the Nasdaq has been down in four out of the past five sessions. Specifically, though, it has fallen four days in a row, shedding 71 points or 4.3%. Viewed in isolation, that decline would unnerve plenty of investors, but when taking into account that the Nasdaq was up 25.6% year-to-date before the recent downturn, it is a little easier to stomach.
The tech sector's recent performance, frankly, is indicative of a sector in the midst of consolidation. To that end, declines have been orderly in nature, volume hasn't been as strong, and market participants have been slow to rally around seemingly good news.
On Tuesday, that trend remained intact as the tech sector muddled through the day on relatively light volume. Meanwhile, the Conference Board's generally reassuring Consumer Confidence report, Corning's (GLW 7.13 -0.17) announcement that it would be re-affirming its Q2 (Jun) outlook, and a Merrill Lynch upgrade of Apple Computer (AAPL 18.78 -0.28) were outweighed by an inclination to stick to the sidelines ahead of the FOMC's interest rate decision, lowered Q2 sales guidance from Advanced Micro Devices (AMD 6.31 -0.28), and a downgrade of Cisco (CSCO 16.75 -0.49) by Soundview that was attributed, in part, to a lack of tangible evidence that the 2H03 growth outlook has improved.
As for the FOMC decision, it is expected around 14:15 ET on Wednesday and Briefing.com is expecting a rate cut of 25 basis points with a risk assessment that is focussed on disinflationary forces. What the market's immediate response to the Fed's move will be is anyone's guess, but for investors, the important thing to keep in mind is that lower rates, in and of themselves, are always good for stock prices.
The latter point notwithstanding, the tech sector's near-term appeal is lessened by the specter of earnings warnings and the need to hear earnings guidance that will validate the run up in stock prices that has been predicated on a belief that there will be a meaningful increase in capital equipment and information technology spending in the latter half of the year. Until then, maintaining a cautious stance at these levels is the prudent thing to do.-- Patrick J. O'Hare, Briefing.com
5:15PM FSI Intl loses less than previously reported (FSII) 3.60 -0.06: -- Update -- Upon further investigation and discussions with Reuters Research, it appears that FSII's Q3 loss is $0.45, excluding the severance related charge of $2.3 mln. According to R.R., the loss related to affiliates is recurring as analysts included it in prior quarters; however, it was not expected to be as large as expected. Either way, it appears the company still missed.
FSI Intl (FSII) 3.61 -0.05: Reported Q3 (May) loss of $0.53 per share, $0.23 worse than the Reuters Research consensus of ($0.30). There are no charges mentioned in the text of the release, but there is a $2.6 mln loss in "earnings of affiliates" in the income statement that may represent an extraordinary item, in touch with Reuters to confirm. Company expects Q4 revenues of $24-26 mln, no analyst estimates on revenues available.
12:48PM Synopsys announces STMicro collaboration (SNPS) 61.87 +0.16: Announces that it is collaborating with STMicroelectronics (STM) on an embedded Bluetooth solution
11:03AM RF Micro Device finding buy interest following Legg Mason comments (RFMD) 5.97 +0.04: Legg Mason's channel checks into the Chinese handset market leads firm to believe that wireless demand will recover to a much healthier level sooner than anticipated. According to firm, handset and service pricing is being discounted so heavily that demand is accelerating and excess inventories are being depleted. The companies that Legg Mason believes will see the most share price appreciation from a faster-than-anticipated recovery of the Chinese market are RF Micro Devices (RFMD), Skyworks (SWKS), Texas Instruments (TXN).
Transmeta (TMTA) 1.48 +0.12: Announced that Plexus (PLXS) has chosen Transmeta's TM5800 processor as a key component in embedded product design applications for Plexus original equipment manufacturer (OEM) customers.
10:50AM Intel slips back toward support (INTC) 20.06 -0.30: -- Technical -- Has weakened in recent action with a new session low established. The low from yesterday comes into play at 20.05 with the 50 day ema/sma coming into play thereafter at 19.95/19.83.
10:30AM Sector Watch: Semiconductor : Group under pressure most of the morning with AMD -6.6% pacing the way following a warning. Other components posting sizeable declines include: BRCM -4.5%, LSI -3%, TXN -2.2%, NSM -1.8%, AMAT -1.5%. Bucking the negative bias today is LSCC +0.5%. The sector index (SOX 356.8 -1.7%) has fallen to support in the 354/353 area (50 day/chart) and has held thus far. Need sustained gains through intraday resistances at 359/360 and 362 to improve the short term pattern.
9:41AM PMC-Sierra cut to Underperform at Piper Jaffray; target $5 (PMCS) 11.73 -0.38: Piper Jaffray downgrades to Underperform from Mkt Perform due to weak service provider spending in Asia and the seasonal summer slowdown; firm also cites excessive valuation, saying the stock is vulnerable to correcting the excesses of the Feb-June runup. Target is $5.
9:28AM S&P 500 and Dow levels : -- Technical -- Initial support for the S&P 500 is in the 980/979.20 area with a posture above leaving the door open for further short term recovery attempts. Resistances are in the 985/986 area and at 990. Secondary support, on a failure, is at yesterday's low (977.40) followed by 975. For the Dow will be watching the 9060/9055 area during any early pressure for an indication of the strength of the slide. Intraday resistances, if this level hold firm, are at 9085 and 9105. Yesterday's low at 9038.36 provides next support.
9:18AM Advanced Micro cuts Q2 sales forecast (AMD) 6.59: Co cuts their Q2 sales outlook to $615 mln, down from previous guidance of at least $715 mln. "The anticipated global sales improvement in the month of June did not materialize as we had anticipated... In particular, the decline in personal computer and handset sell-through in China and other Asian markets, largely related to the SARS epidemic, significantly affected AMD's sales in the second quarter."
8:43AM FTC requests additional info from GNSS and PXLW (PXLW) 6.18: GNSS and PXLW announced it has received a request from the Federal Trade Commission for additional information and documentary material in connection with the proposed merger between the two companies.
8:37AM Corning reaffirms Q2 outlook (GLW) 7.30: Ahead of conference presentation today, co says it will tell investors that it continues to make significant progress on its three main priorities of protecting its financial health, returning to profitability in 2003 and investing in its future. Corning expects to be profitable for the full-year and will return to profitability in the third quarter, if not sooner, excluding special items. Co also reiterating Q2 guidance.
8:33AM Intersil announces sampling of true global WLAN solution (ISIL) 24.62: The Co. announced its sampling a "true" dual band Wireless Local Area Networking or WLAN solution with its key customers and Original Design Manufacturers or ODMs. It is called the PRISM WorldRadio and is capable of allowing its users to establish a network connection throughout the world with any standards compliant 802.11 infrastructure encountered, which includes 802.11a, b, d, g, h, i, or j. It is capable of ranges that cover the vast WLAN spectrum of 2.40-2.50 and 4.9-5.85 GHz. In addition, the PRISM WorldRadio delivers the industry's best power performance by consuming up to 75% less power than competitive designs.
8:24AM Dell to offer Novell's Linux software services to its enterprise customers (NOVL) 3.22:
7:28AM Juniper Networks downgraded at Wachovia (JNPR) 12.54: Wachovia downgrades to Underperform from Mkt Perform, saying checks lead them to believe that spending in both China and Europe slowed in Q2; also, firm says the stock's valuation at 80x their 2004 est is probably reflecting stronger business momentum than is likely to materialize; sees valuation range at $8-$10.
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